Business Sale Agreement (New Zealand)
Business Sale Agreement
This Business Sale Agreement (Agreement) is entered into on [Agreement Date] between [Vendor Name] (NZBN [Vendor NZBN], IRD [Vendor IRD Number]) of [Vendor Address] (Vendor) and [Purchaser Name] (NZBN [Purchaser NZBN], IRD [Purchaser IRD Number]) of [Purchaser Address] (Purchaser).
This Agreement is governed by the laws of New Zealand, including the Contract and Commercial Law Act 2017 (CCLA), the Goods and Services Tax Act 1985, the Employment Relations Act 2000, the Property Law Act 2007, and the Fair Trading Act 1986.
1. The Business
1.1 The Vendor agrees to sell, and the Purchaser agrees to purchase, the business known as [Business Name] carried on at [Business Address] (Business), comprising the following assets (Assets):
[Business Assets].
1.2 The following assets are specifically excluded from this sale and retained by the Vendor: [Excluded Assets].
1.3 The Business is described as follows: [Business Description].
1.4 Lease. The business premises are subject to the following lease arrangements: [Lease Details]. The Vendor shall use all reasonable endeavours to obtain any required landlord's consent to assignment of the lease to the Purchaser under the Property Law Act 2007.
2. Purchase Price and Payment
2.1 Purchase price. The total purchase price for the Business is [Purchase Price] (Purchase Price), allocated between asset classes as follows: [Price Allocation].
2.2 Stock. The stock-in-trade shall be valued as follows: [Stock Valuation]. The final purchase price shall be adjusted to reflect the actual stock value at completion.
2.3 GST. [GST Treatment]. The parties shall comply with all requirements of the Goods and Services Tax Act 1985, including the obligation to issue a valid tax invoice.
2.4 Deposit. A deposit of [Deposit Amount] is payable to the Vendor's lawyer in trust on the signing of this Agreement.
2.5 Balance. The balance of [Balance Payable] (adjusted for stock valuation) is payable by the Purchaser in cleared funds on the completion date.
3. Conditions Precedent
3.1 Conditions. This Agreement is conditional on the following conditions being satisfied or waived by [Satisfaction Date]: [Conditions].
3.2 Each party must use all reasonable endeavours to satisfy any condition which is within its control. If a condition has not been satisfied or waived by the satisfaction date, either party may cancel this Agreement by written notice to the other, and the deposit shall be refunded to the Purchaser (unless the failure is due to the Purchaser's breach).
3.3 Completion. Completion of the sale shall take place on [Completion Date]. At completion: (a) the Vendor shall deliver to the Purchaser all keys, access codes, documents of title, business records, and other Assets; (b) the Purchaser shall pay the balance of the Purchase Price in cleared funds; and (c) the parties shall execute all further documents as may be reasonably required to give effect to this Agreement.
4. Employees
4.1 Transfer of employees. Employee transfer status: [Employees Transferred]. Where employees transfer to the Purchaser, the Purchaser acknowledges its obligations under sections 69I to 69OA of the Employment Relations Act 2000 in relation to the restructuring arising from this business sale. The Purchaser agrees to offer employment to all transferring employees on terms no less favourable than their current terms and conditions of employment.
4.2 Accrued entitlements. The parties agree on the following treatment of accrued employee entitlements (including annual leave, sick leave, and other statutory entitlements under the Holidays Act 2003): [Employee Entitlements].
5. Vendor's Post-Completion Obligations
5.1 Training. The Vendor agrees to provide: [Training Period]. The Vendor shall introduce the Purchaser to key customers, suppliers, and staff and assist with the general handover of the Business.
5.2 Restraint of trade. A restraint of trade applies: [Restraint of Trade]. For the period of [Restraint Period], the Vendor must not, within [Restraint Area]: [Restraint Activities]. The parties acknowledge that this restraint is reasonable and necessary to protect the legitimate business interests of the Purchaser in the goodwill of the Business. If any part of this restraint is found to be unreasonable by a New Zealand court, the court may reduce it to the extent necessary to make it enforceable.
6. Vendor Representations and Warranties
6.1 The Vendor represents and warrants to the Purchaser as at the date of this Agreement and as at the completion date that:
- the Vendor has full legal authority to sell the Business and the Assets, and the Assets are not encumbered by any mortgage, charge, or PPSR registration (except as disclosed);
- the Business has been operated in the ordinary course and in compliance with all applicable laws, including the Fair Trading Act 1986, the Health and Safety at Work Act 2015, the Food Act 2014, and any applicable liquor licensing laws;
- all material business licences and permits (including any liquor licence under the Sale and Supply of Alcohol Act 2012) are current, valid, and in good standing;
- the financial statements and records disclosed to the Purchaser are accurate and present a true and fair view of the financial position of the Business;
- there are no pending or threatened legal proceedings, claims, or Inland Revenue investigations relating to the Business;
- the Vendor has met all tax obligations to Inland Revenue, including GST and PAYE, and there are no outstanding tax debts;
- all employee entitlements have been properly accrued and there are no outstanding personal grievances, claims, or disputes under the Employment Relations Act 2000;
- all plant and equipment included in the sale is in good working order, fair wear and tear excepted.
6.2 Warranty claims must be notified in writing within 12 months of completion. The Vendor's total liability for warranty claims is limited to the Purchase Price.
7. General Terms
7.1 Governing law. This Agreement is governed by and construed in accordance with the laws of New Zealand. The parties submit to the non-exclusive jurisdiction of the New Zealand courts.
7.2 Entire agreement. This Agreement constitutes the entire agreement between the parties with respect to the sale and purchase of the Business and supersedes all prior negotiations, representations, and understandings.
7.3 Amendment. This Agreement may only be amended by written agreement signed by both parties.
7.4 Vendor to carry on business. The Vendor must continue to carry on the Business in the ordinary course between the date of this Agreement and completion, and must not enter into any material transaction outside the ordinary course without the Purchaser's prior written consent.
7.5 Special conditions. The following special conditions apply to this Agreement: [Special Conditions].
Vendor
________________
Signature
Purchaser
________________
Signature
Witness to Vendor's signature
________________
Signature
Witness to Purchaser's signature
________________
Signature
What Is a Business Sale Agreement (New Zealand)?
A Business Sale Agreement in New Zealand transfers ownership of a business or its assets from seller to buyer and records the price, assets included, and warranties given, with the sale governed by the Companies Act 1993.
In New Zealand, business sale agreements are governed primarily by the Contract and Commercial Law Act 2017 (CCLA), which consolidated and replaced several earlier pieces of legislation including the Contractual Remedies Act 1979. The CCLA governs the formation, performance, breach, and remedies relating to the agreement. Additional legislation that commonly applies to New Zealand business sales includes the Goods and Services Tax Act 1985 (for GST and zero-rating of going concern sales), the Employment Relations Act 2000 (for employee transfer obligations), the Property Law Act 2007 (for lease assignments), the Fair Trading Act 1986 (for representations made during the sale process), and the Holidays Act 2003 (for accrued employee entitlements).
A business sale is one of the most complex commercial transactions a New Zealand business owner will undertake. Unlike a share sale (where the purchaser acquires the shares of the company and everything within it), a business sale involves the identification, valuation, and transfer of individual assets and (in some cases) liabilities. The parties must agree on the purchase price, the GST treatment (including whether the transaction qualifies as a zero-rated going concern under section 11(1)(m) of the GST Act 1985), the allocation of the price between asset classes, the treatment of employees under the ERA 2000, the assignment of the business premises lease, the transfer of licences and permits, and the vendor's post-completion obligations (including any restraint of trade and training period).
A well-drafted Business Sale Agreement is essential to protecting both the vendor and the purchaser and to confirming that the transaction is completed efficiently and in compliance with New Zealand law. In New Zealand, the Business Sale Agreement must address the Overseas Investment Act 2005 where the purchaser is an overseas person acquiring sensitive New Zealand business assets, and may require Overseas Investment Office (OIO) consent before completion. The Commerce Act 1986 may require prior clearance from the Commerce Commission where the transaction could substantially lessen competition in a New Zealand market.
When Do You Need a Business Sale Agreement (New Zealand)?
A Business Sale Agreement is needed whenever the owner of a New Zealand business wishes to sell that business to a third party. The following circumstances commonly require a formal Business Sale Agreement.
Retirement or exit: When a business owner reaches retirement age and wishes to sell the business, a Business Sale Agreement provides the legal framework for the transition of ownership. It is particularly important where the vendor also wishes to impose a restraint of trade to protect the value of goodwill being sold.
Partnership or ownership disputes: When two or more co-owners of a business wish to restructure the ownership by one partner buying out the other, a Business Sale Agreement governs the terms of the buyout.
Strategic acquisition: When a larger business or competitor wishes to acquire a smaller business (including its customer base, brand, intellectual property, or geographic footprint), a Business Sale Agreement documents the transaction. The Commerce Act 1986 may require merger clearance from the Commerce Commission where the combined market share of the parties exceeds the statutory thresholds.
Insolvent or distressed sales: When a company is in financial difficulty and a receiver, liquidator, or voluntary administrator is appointed under the Companies Act 1993 or the Receiverships Act 1993, the appointed insolvency practitioner may sell the business as a going concern to maximise realisation value for creditors.
Franchise sales: When a franchisee wishes to sell their franchise business (including the franchise rights, goodwill, and assets), a Business Sale Agreement is required in addition to any franchise-specific documentation required by the franchisor.
Government business privatisation: When a government-owned business or council-controlled organisation is being sold to a private sector purchaser, a Business Sale Agreement provides the contractual framework for the transfer of assets, employees, and contracts.
What to Include in Your Business Sale Agreement (New Zealand)
A thorough New Zealand Business Sale Agreement should address the following key elements.
Description of the business and assets: The agreement must describe the business being sold (its trading name, location, and nature) and thoroughly list all included assets (plant, equipment, stock, goodwill, intellectual property, customer lists, supplier relationships, business records) and any excluded assets (typically cash, receivables, and personal assets).
Purchase price, GST, and allocation: The purchase price must be specified, along with whether the transaction is a zero-rated going concern supply under section 11(1)(m) of the Goods and Services Tax Act 1985. The purchase price must be allocated between asset classes for tax purposes under the Income Tax Act 2007, as different assets have different tax treatments for both the vendor and the purchaser.
Stock valuation: If the business holds trading stock (inventory), the agreement must specify how the stock will be valued at completion (typically by a stocktake at cost price on or before the completion date) and whether the stock value is variable or fixed.
Conditions precedent: Common conditions in New Zealand business sales include satisfactory due diligence, landlord's consent to lease assignment under the Property Law Act 2007, transfer of licences (e.g. liquor licence under the Sale and Supply of Alcohol Act 2012, food control plan under the Food Act 2014), and Overseas Investment Office consent (if applicable under the Overseas Investment Act 2005).
Employee transfer: If the business is sold as a going concern (a 'restructuring' under the ERA 2000), the vendor must notify and consult with affected employees, and the purchaser must offer employment on existing terms. Accrued entitlements under the Holidays Act 2003 must be addressed in the agreement.
Vendor obligations post-completion: The agreement should specify any training and handover obligations of the vendor and any restraint of trade. A restraint of trade protecting the goodwill transferred is a standard feature of New Zealand business sale agreements and must be reasonable in scope, duration, and geographic area to be enforceable.
Vendor warranties: The vendor should provide thorough warranties as to title, business compliance, financial accuracy, and absence of undisclosed liabilities, with appropriate limitations on total warranty liability and the time for making claims.
Governing law: The agreement must be governed by the laws of New Zealand, including the Contract and Commercial Law Act 2017 (CCLA), with the parties submitting to the non-exclusive jurisdiction of the New Zealand courts. The forms-legal.com Business Sale Agreement (New Zealand) provides a ready-to-use template that meets New Zealand legal requirements. Additional key provisions for New Zealand business sale agreements include: a tax indemnity protecting the purchaser from pre-completion tax liabilities of the vendor; a landlord consent condition requiring assignment of the premises lease under section 208 of the Property Law Act 2007; a competition clearance condition under the Commerce Act 1986 where applicable; and the vendor's obligation to notify Inland Revenue of the disposal as required under the Income Tax Act 2007.
Cite this page
Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Business Sale Agreement (New Zealand) (New Zealand) [Legal document template]. Forms Legal. https://forms-legal.com/new-zealand/business/corporate/business-sale-agreement-new-zealand
"Business Sale Agreement (New Zealand) (New Zealand)." Forms Legal, 2026, https://forms-legal.com/new-zealand/business/corporate/business-sale-agreement-new-zealand.
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author = {{Forms Legal}},
title = {Business Sale Agreement (New Zealand) (New Zealand)},
year = {2026},
howpublished = {\url{https://forms-legal.com/new-zealand/business/corporate/business-sale-agreement-new-zealand}},
note = {Free legal document template. Based on Companies Act 1993}
}
Frequently Asked Questions
The sale of a business in New Zealand is governed by several pieces of legislation depending on the nature of the business and the transaction structure. The Contract and Commercial Law Act 2017 (CCLA) is the primary legislation governing the contractual aspects of the sale, including formation, performance, breach, and remedies. It replaced and consolidated the Contractual Remedies Act 1979 and related legislation. The Goods and Services Tax Act 1985 governs the GST treatment of the transaction, including the zero-rated going concern provisions in section 11(1)(m). The Employment Relations Act 2000 governs the rights of employees when a business is sold as a going concern (restructuring provisions in sections 69I to 69OA). The Property Law Act 2007 governs the assignment of commercial leases, and the Fair Trading Act 1986 prohibits misleading or deceptive conduct in trade. Depending on the nature of the business, additional legislation may apply: the Sale and Supply of Alcohol Act 2012 (for liquor-licensed businesses), the Food Act 2014 (for food businesses), and the Overseas Investment Act 2005 (for overseas purchasers of sensitive New Zealand assets). The Commerce Act 1986 may also require merger clearance from the Commerce Commission for larger transactions.
A going concern is a business that is capable of continuing to operate after the sale with all necessary assets, staff, contracts, and systems in place. The concept is critically important in New Zealand business sales because it determines whether the transaction is zero-rated for GST purposes. Under section 11(1)(m) of the Goods and Services Tax Act 1985, the supply of a going concern is zero-rated (charged at 0% GST) rather than the standard 15% GST rate, provided all of the following conditions are met: (1) both the vendor and purchaser must be registered for GST; (2) the supply must include all assets and things necessary for the purchaser to continue operating the taxable activity; (3) the vendor must carry on the taxable activity until the date of supply; and (4) the parties must agree in writing in the agreement that the supply is a going concern. The practical benefit of zero-rating is significant: on a $1 million business sale, avoiding 15% GST means the purchaser does not need to fund a $150,000 GST payment (even if it could eventually claim it back as a GST input credit). If the going concern zero-rating is incorrectly applied, the vendor may be assessed for GST by Inland Revenue, with interest and penalties. Tax advice is essential.
When a New Zealand business is sold as a going concern, the Employment Relations Act 2000 gives employees specific rights in relation to the sale. Under sections 69I to 69OA of the ERA 2000, if the sale constitutes a 'restructuring' (which includes the sale of a business or a significant part of it), the employer (vendor) must notify affected employees and consult with them about the proposed restructuring. The vendor and purchaser must also agree on whether employees will transfer to the purchaser, and if so, the purchaser must offer to employ the affected employees on terms and conditions no less favourable than their current employment. Employees who are offered such employment are not entitled to redundancy compensation if they decline the offer without reasonable grounds. Employees who transfer to the purchaser retain all existing entitlements, including annual leave, sick leave, and service-related entitlements under the Holidays Act 2003. If the purchaser does not offer to employ an affected employee, the vendor may be obliged to pay redundancy under any applicable employment agreement or established workplace practice. Any personal grievance claims or unresolved employment disputes at the time of the sale remain the responsibility of the vendor unless expressly assumed by the purchaser in the business sale agreement.
The allocation of the purchase price between different asset classes is one of the most tax-sensitive aspects of a New Zealand business sale. Inland Revenue requires the parties to allocate the purchase price on an arm's-length basis between different types of assets, and each allocation can have different tax consequences. For the vendor, depreciation recovery income arises on the sale of depreciable assets (plant, equipment, vehicles) at a price above their tax book value, under section EE 48 of the Income Tax Act 2007. For trading stock (inventory), any amount received above cost price may be taxable as income under the trading stock provisions. Goodwill is generally not taxable for the vendor and is not depreciable for the purchaser (with limited exceptions). Intellectual property and customer lists may be depreciable for the purchaser at rates specified by Inland Revenue. For these reasons, the parties often have conflicting interests in the allocation: the vendor prefers to allocate more to goodwill (not taxable) and the purchaser prefers to allocate more to depreciable assets (allowing future depreciation deductions). A neutral third party or the parties' accountants should agree on a commercially reasonable allocation that reflects the fair market value of each asset class. The purchase price allocation must be included in the business sale agreement and the parties must file consistent tax positions with Inland Revenue.
Due diligence is a critical step in any New Zealand business purchase and typically occurs in the period between signing the business sale agreement and the satisfaction of conditions. Key areas of due diligence for a New Zealand business purchase include: (1) Financial due diligence — reviewing the last two to three years of financial statements, tax returns filed with Inland Revenue, GST returns, bank statements, and management accounts to verify revenue, expenses, and profitability; (2) Legal due diligence — reviewing the business lease (including rent review clauses, rights of renewal, and assignment provisions), all material supplier and customer contracts (and their assignability), intellectual property ownership, and any outstanding legal proceedings; (3) Employment due diligence — reviewing all employment agreements, identifying accrued entitlements under the Holidays Act 2003, checking for any personal grievances under the Employment Relations Act 2000, and verifying PAYE and KiwiSaver compliance with Inland Revenue; (4) Regulatory due diligence — verifying all licences and permits (including food control plans under the Food Act 2014, liquor licences under the Sale and Supply of Alcohol Act 2012, and building consents) are current and transferable; (5) Tax due diligence — confirming GST registration, checking for outstanding Inland Revenue obligations, reviewing any disputes or audits; and (6) Property due diligence — reviewing the LIM (Land Information Memorandum) from the relevant local council, building inspection reports, and compliance with the Building Act 2004.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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